Savills: European real estate transaction volume rises to around EUR 77 billion in Q4 2025

1. High-quality office properties in central locations remain a choice for defensive core strategies. Low vacancy rates, strong tenant demand and a sustained shift in demand for high-quality space continue to support prices in Europe's largest and most liquid capitals.
2. Hotels in established year-round travel destinations, including France, the UK (especially London), Italy, Spain, Portugal and Greece, remain in demand. Savills also expects transaction volumes in Germany to continue to rise. Strong international visitor numbers and robust spending on leisure activities underpin the positive long-term outlook for this sector.
3. Institutional residential real estate in capital cities and large metropolitan areas offers lasting income despite population decline, driven by structural undersupply and continued growth in household numbers.
4. The best shopping streets in major European cities are seeing stabilising occupancy, high tenant demand and growing tourist flows. At the same time, retail sales across Europe are stabilising at around 2% on average.

1. The modernisation of older or no longer marketable office buildings in central or well-connected locations offers a high potential for appreciation, supported by stricter ESG regulations and growing rental price differentials between prime and second-class properties.
2. Modern logistics properties with short remaining terms, potential for rent increases in new lettings or with upgrading potential remain attractive. The growing concentration of light production and logistics in urban areas continues to offer economies of scale and operational advantages, especially for the transformation into last-mile logistics.
3. Retail parks and shopping centres with stable catchment areas but with operational or layout-related inefficiencies offer opportunities for re-letting, reconfiguration or repositioning as a partially mixed-use basis.
4. Self storage, cold stores, dark kitchens, outdoor storage and charging stations for electric vehicles: investors are increasingly interested in these emerging sectors. They provide stable, service-related revenue streams and structural demand drivers that are less susceptible to cyclical fluctuations in the real estate market. They also offer higher return potential.

1. Well-located office buildings with outdated specifications, outdated floor plans or development potential under building law offer good opportunities for repositioning and refurbishment, as first-class office space in well-connected locations is still scarce and new construction space remains limited.
2. Conversions, mostly from commercial to residential, remain a major opportunistic issue, especially in markets with structural housing shortages.

James Burke, Director Global Cross Border Investment at Savills, says: "Based on purchase agreements signed since October and other transactions in the pipeline, we expect cross-border inflows to remain strong, averaging 45% of total activity. For 2026, we expect a further increase in cross-border investments within Europe. The main driver of this development is the strong commitment of established, cross-border investors from Europe. In particular, buyers from the UK, France and Sweden have already expanded their activities outside their home markets in 2025. In our estimation, this trend will continue in 2026. In 2025, there was a cautious return of investors from the Middle East to the European real estate market. In our opinion, this trend will continue to gain momentum in the new year. North American buyers will continue to be active as both buyers and sellers, consolidating their position as key market players."

Lydia Brissy, Director in Savills' European Commercial Research Team, adds: "We forecast that investment in European real estate will increase by around 18% in 2026 as prices stabilise and macroeconomic conditions stabilise and institutional capital returns to key real estate sectors. The office market is expected to regain momentum as investors respond to attractive prices and regained confidence in prime properties. The residential real estate sector will continue to attract great interest in 2026."